New Jersey sales tax is a 6.625% tax on most goods and some services, collected by retailers at the point of sale

When you buy something in New Jersey, the retailer adds 6.625% to your bill. This is the statewide rate. Some counties and municipalities add their own local tax on top, which can raise the total to as high as 7.625% depending on where you shop. The tax applies to tangible personal property — things you can touch and take with you — and to certain services like hotel stays, parking, and telecommunications.

The retailer collects the tax from you and sends it to the New Jersey Division of Taxation. You do not send sales tax directly to the state; the store handles that. However, if you are self-employed or run a business, you may need to register for a sales tax permit and handle collections yourself.

Key Takeaways

  • New Jersey's statewide sales tax rate is 6.625%, but your actual rate depends on your county and municipality, ranging up to 7.625%.
  • Groceries, prescription medications, and most clothing under $110 are exempt from sales tax in New Jersey.
  • If you operate a business that sells taxable items, you must register for a sales tax permit with the New Jersey Division of Taxation.
  • Businesses file sales tax returns monthly, quarterly, or annually depending on their sales volume and the state's assignment.

What is and is not taxed in New Jersey

Most physical goods are taxable, but New Jersey has several important exemptions. Groceries and food for home consumption are not taxed. Prescription medications and medical devices are exempt. Clothing and footwear under $110 per item are tax-free; anything over that threshold is taxed on the full amount.

Services are taxed selectively. A haircut is taxed. A doctor's office visit is not. Hotel rooms are taxed. Laundry services are taxed. Repair services — fixing a car, repairing a computer — are generally taxed. Utilities like electricity and natural gas are taxed at a lower rate of 5.525% statewide, with local additions possible.

Digital products and services have their own rules. Streaming subscriptions, software downloads, and digital books are generally taxed. Newspapers and magazines in print are not taxed, but digital subscriptions are.

Local tax rates by county

The 6.625% statewide rate is the floor. Your county and municipality may add additional tax. Bergen County, for example, adds 0.375%, bringing the total to 7%. Hudson County adds 0.625%, reaching 7.25%. Some municipalities within those counties add even more.

The easiest way to find your exact rate is to enter your address into the New Jersey Division of Taxation's sales tax rate lookup tool on their website, or to ask the retailer. The rate you see on your receipt is the one that applies to that location.

If you own a business and collect sales tax

If you sell taxable goods or services in New Jersey, you must register for a sales tax permit before you open. You do this through the New Jersey Division of Taxation. The permit is free, but registration is mandatory.

Once registered, you collect sales tax from customers and file returns with the state. How often you file depends on your sales volume. High-volume sellers file monthly. Smaller businesses may file quarterly or annually. The state will tell you your filing frequency when you register.

You keep detailed records of all sales and the tax you collected. When you file, you report total sales, taxable sales, tax collected, and any tax you paid on items you bought for resale. If you make a mistake on a return, you can file an amended return with the Division of Taxation.

Resale certificates and tax-exempt purchases

If you buy items to resell, you do not pay sales tax on those purchases — you collect it from your customers instead. To do this, you provide the seller with a resale certificate, which is a form stating that you are buying for resale. The New Jersey Division of Taxation provides this form.

Certain organizations — nonprofits, schools, government agencies — may be exempt from sales tax on their purchases. They provide an exemption certificate to the seller instead of paying tax. The rules for who qualifies are specific, and the Division of Taxation maintains a list of exempt organization types.

How sales tax affects your personal finances

As a consumer, sales tax is a cost you cannot avoid on most purchases. It reduces the real purchasing power of your money. A $100 item costs $106.63 in most of New Jersey after tax. When you budget for large purchases, factor in the tax.

If you live near a state border, you might consider where you shop. Pennsylvania has no sales tax on clothing, and Delaware has no sales tax at all. However, you owe New Jersey sales tax on items you bring back into the state if you bought them specifically to avoid tax — though this is rarely enforced for personal purchases.

For tax planning purposes, the sales tax you pay is generally not deductible on your federal income tax return. However, if you are self-employed and buy supplies or equipment for your business, those purchases may be deductible as business expenses, separate from the sales tax you paid on them.

Frequently Asked Questions

Is sales tax included in the price shown on the shelf?

No. Prices in New Jersey stores are displayed before tax. The sales tax is added at checkout. This is why the total you pay is higher than the price tag.

Do I pay sales tax on online purchases from New Jersey retailers?

Yes. If you order from a retailer based in New Jersey or one that has a physical presence in the state, they must collect and remit sales tax. The rate depends on where the item is being shipped within New Jersey.

What happens if a business does not collect or remit sales tax?

The New Jersey Division of Taxation can assess penalties, interest, and back taxes. Businesses that fail to register or file returns face civil and potentially criminal penalties. The state conducts audits and has enforcement programs targeting non-compliance.

Can I deduct sales tax I paid on business purchases?

The sales tax itself is not deductible, but the underlying purchase may be. If you buy a computer for your business, you deduct the cost of the computer (including the tax you paid) as a business expense. The tax is part of the cost basis.

Does New Jersey tax services the same way it taxes goods?

No. Services are taxed only if they are specifically listed as taxable. Labor and services are generally not taxed unless the law names them. This is why a plumber's service call may be taxed but a lawyer's consultation typically is not.